Income Distribution: Incomes of Aboriginal and Torres Strait Islander Australians
In 2001, the average equivalised gross household income for Indigenous persons was 62% of that for non-Indigenous persons.

Income is a key factor in determining the economic wellbeing for most Australians. Aboriginal and Torres Strait Islander peoples are widely recognised as being among the most disadvantaged groups in Australia. They experience higher rates of unemployment, poorer educational outcomes and lower rates of home ownership than non-Indigenous Australians.(SEE ENDNOTE 1) Many rely on government transfers as their major source of income.

When examining economic wellbeing, it is important to consider both individual and household incomes. People living in families or group households generally contribute to the purchase of goods and services shared by other household members, particularly children. Equivalised household income takes into account the economies of scale achieved by people living together - by adjusting for the size and composition of the household.HOUSEHOLD INCOMES
On average, after adjustment for household size and composition, the household income of Indigenous persons is much lower than the income of non-Indigenous persons. In 2001, the average equivalised gross household income for Indigenous persons was 62% of the equivalent income for non-Indigenous persons ($364 per week compared with $585). In Very Remote areas, where Indigenous persons account for nearly half of the total population, the income for Indigenous persons was only 43% of the income for non-Indigenous persons.

AVERAGE EQUIVALISED GROSS HOUSEHOLD INCOME PER WEEK BY REMOTENESS AREA - 2001

INDIGENOUS INCOME

This article draws on data from the ABS 1996 and 2001 Censuses of Population and Housing. In the census, a person is defined as Indigenous if they reported, or were reported as, being of Aboriginal and/or Torres Strait Islander Origin.

Individual income is gross income (i.e. before tax or other deductions) from all sources including wages and salaries, pensions, allowances, interest and dividends.

Equivalised gross household income is a standardised income measure which has been adjusted for the different income needs of households of different size and composition. It takes into account the greater needs of larger households and the economies of scale achieved by people living together.

For a lone-person household it is equal to gross household income. For a household comprising more than one person, it is an indicator of the gross household income that would need to be received by a lone person household to achieve the same level of economic wellbeing as the household in question (see Australian Social Trends 2004, Household incomes, pp. 142-145).

Community Development Employment Projects (CDEP) scheme - for a description of the CDEP scheme see Australian Social Trends 2004, Aboriginal and Torres Strait Islander peoples in the labour force, pp. 118-123.

Mainstream employment for Indigenous persons is non-CDEP employment.

Average equivalised gross household income for Torres Strait Islanders ($380 per week) was about 4% higher than the average for all Indigenous persons ($364 per week), while the corresponding income for Aboriginal persons ($363 per week) was almost identical to that for all Indigenous persons.

Equivalised gross household income of both Indigenous and non-Indigenous persons increased over the five-year period to 2001. However, in real terms, average equivalised household income for Indigenous persons grew less rapidly over that period (11% compared with 13%). As a result, the average equivalised gross household income for Indigenous persons declined from 64% of the average income for non-Indigenous persons in 1996, to 62% in 2001.

AVERAGE EQUIVALISED GROSS HOUSEHOLD INCOME PER WEEK BY REMOTENESS AREA - 2001

Indigenous

Non-Indigenous

Major

Inner

Outer

Very

Cities

Regional

Regional

Remote

Remote

Total

Total

$

$

$

$

$

$

$

New South Wales

450

357

318

314

305

387

614

Victoria

468

373

336

283

. .

415

589

Queensland

426

351

358

365

309

368

549

South Australia

387

370

322

382

279

351

535

Western Australia

388

360

346

387

271

344

576

Tasmania

. .

382

375

371

396

379

491

Northern Territory

. .

. .

425

341

241

288

694

Australian Capital Territory

560

n.a.

. .

. .

. .

559

748

Australia

435

360

352

356

267

364

585

Source: ABS 2001 Census of Population and Housing.

...REGIONAL DIFFERENCES
In 2001, Indigenous equivalised household incomes were highest in Major Cities and generally declined with increasing geographic remoteness. However, such incomes for non-Indigenous persons were highest in Major Cities and Very Remote areas and only slightly lower in Remote areas. As a consequence, in non-remote areas, average equivalised household incomes for Indigenous persons were equal to about 70% of incomes for non-Indigenous persons. In Remote areas they were equal to 61% and in Very Remote areas 43%. For Torres Strait Islanders, the average equivalised gross household income for those living in the Torres Strait Area ($330 per week) was 87% of the average for all Torres Strait Islanders living in the Strait and elsewhere in Australia.

GROWTH IN AVERAGE EQUIVALISED GROSS HOUSEHOLD INCOME BY REMOTENESS AREA - 1996-2001

Over the period 1996 to 2001, the rate of growth of average real equivalised gross household income for Indigenous persons was highest in Major Cities and declined with increasing geographic remoteness. In Major Cities, growth in real household income for Indigenous persons (14%) was slightly higher than the growth for non-Indigenous persons (13% ). However, in Very Remote areas, where many Indigenous households rely on government transfers as their main source of income, growth in real household income for Indigenous persons was only 6%.

...STATE AND TERRITORY COMPARISONS
In 2001, the average equivalised gross household incomes for Indigenous persons were highest in the Australian Capital Territory and the more urbanised states of south-eastern Australia; and lower in Queensland, South Australia, Western Australia and the Northern Territory. In particular, these differences were influenced by the proportions of the population living in Very Remote areas, where there are limited and specialised labour market opportunities (for more information, see Australian Social Trends 2004, Aboriginal and Torres Strait Islander peoples in the labour force, pp. 118-123).

Average equivalised gross household incomes for Indigenous persons were highest in the more accessible areas of each state and territory; and generally declined with increasing remoteness. Unlike other capital cities, Darwin is classified within Outer Regional Australia and, largely due to its employment opportunities, the average equivalised gross household income of Indigenous persons in Outer Regional areas of the Northern Territory ($425 per week) was 24% higher than the average for Indigenous persons in Outer Regional areas elsewhere. Similarly, among Inner Regional areas, Indigenous household incomes were highest in Tasmania ($382 per week), reflecting in part the classification of Hobart within Inner Regional Australia.

In 2001, the largest difference between Indigenous and non-Indigenous household incomes occurred in the Northern Territory where the average equivalised gross household income for Indigenous persons was less than half (41%) of the average for non-Indigenous persons ($288 and $694 per week respectively). This disparity was influenced both by the low Indigenous average (the lowest of any state or territory) and the high non-Indigenous average (second only to the Australian Capital Territory).

INDIVIDUAL INCOMES
Individual income is closely related to paid work, as wages and salaries are the major source of income for most Australians. In 2001, the median individual income of Indigenous persons aged 15 years and over was $226 per week compared with $380 per week for non-Indigenous persons. Lower rates of mainstream (non-CDEP) employment among Indigenous persons and their greater likelihood to work in lower skill occupations contributed to the income disparity between Indigenous and non-Indigenous persons.

In 2001, 40% of Indigenous persons aged 15 years and over compared with 58% of non-Indigenous persons of this age were employed. When Indigenous persons who reported that they were participants in CDEP were excluded, 33% of Indigenous persons aged 15 years and over were in mainstream employment.

MEDIAN INDIVIDUAL INCOME BY LABOUR FORCE STATUS - 2001

LOW INCOME HOUSEHOLDS

In 2001, 33% of Indigenous persons were in the second and third lowest deciles of the national distribution of all persons when ranked by their equivalised gross household income. Reflecting the general decline in average income with increasing geographic remoteness, the proportion of Indigenous persons in the second and third lowest deciles of household incomes rose from 26% in Major Cities to 44% in Very Remote areas. The Northern Territory, with the highest proportion of its population in Very Remote areas, (63%), was also the state/territory with the highest proportion of Indigenous persons in the second and third lowest deciles (42%).

PROPORTION OF PEOPLE IN THE SECOND AND THIRD LOWEST DECILES OF EQUIVALISED HOUSEHOLD INCOMES - 2001

Indigenous

Non-Indigenous

State or territory

%

%

NSW

29.5

18.7

Vic.

27.2

18.8

Qld

33.5

21.7

SA

34.0

22.7

WA

33.5

18.8

Tas.

32.4

26.0

NT

41.6

10.3

ACT

16.1

9.9

Aust.

32.8

19.6

Source: ABS 2001 Census of Population and Housing.

...MAINSTREAM EMPLOYMENT

The median individual income of Indigenous persons in mainstream employment ($501 per week) was equal to 85% of the median for non-Indigenous persons ($589 per week). This difference reflects in part the larger share of the Indigenous labour force working in lower skilled occupations and, to a lesser extent, income differences within the same occupation between Indigenous and non-Indigenous persons.

Consistent with lower levels of educational attainment, Indigenous persons in mainstream employment were less likely to be working in the highest skill occupation group than non-Indigenous persons (17% compared to 28%), while the pattern was reversed for the two lowest skill occupation groups (57% compared to 43%). Among Indigenous persons in mainstream employment, the median individual income of persons working in the highest skill occupation group was $691 per week compared with $439 per week for those in the two lowest skill occupation groups (see Australian Social Trends 2004, Work: definitions, pp. 106-107 for definitions of skill groups).

There was a tendency for individual incomes of Indigenous persons to be lower than those of non-Indigenous persons in the same occupation category. Median individual income for Indigenous persons in mainstream employment was equal to 85%-95% of the corresponding individual income of non-Indigenous persons in most major occupation groups. The occupation group with the largest differential in median income levels was Professionals, in which Indigenous persons earned 76% of the income of non-Indigenous persons. Among Elementary clerical, sales and service workers, Indigenous and non-Indigenous persons had nearly the same levels of income, while the median income for Indigenous Intermediate production and transport workers was 97% of the corresponding income of non-Indigenous workers.

Differences in individual income levels between Indigenous and non-Indigenous persons were not significantly influenced by differences in hours worked. Similar proportions of Indigenous and non-Indigenous persons reported working full-time hours. The ratio between Indigenous and non-Indigenous individual incomes for full-time workers was very similar to the ratio between Indigenous and non-Indigenous incomes for all workers.

The Mining Industry is an important source of income for many people living in Remote and Very Remote areas. In 2001, approximately 1,400 Indigenous persons (1.7% of all Indigenous persons in mainstream employment) and 73,400 non-Indigenous persons (0.9% of employed non-Indigenous persons) were employed in the Mining Industry. Western Australia (500) and Queensland (480) had the highest number of Indigenous persons in the Mining Industry.

The median individual income of Indigenous persons in the Mining Industry ($993 per week) was almost twice as high as the corresponding income of all Indigenous persons in mainstream employment ($501 per week).

MEDIAN INDIVIDUAL INCOME IN THE MINING INDUSTRY(a) - 2001

Mining

Non-Indigenous

Indigenous

Total Indigenous

$

$

$

NSW

1,298

1,012

514

Qld

1,299

1,066

479

WA

1,277

1,005

504

SA

1,097

725

507

NT

1,262

872

523

Aust.

1,261

993

501

(a) Includes all Indigenous employed persons 15 years and over not participating in CDEP and all non-Indigenous employed persons 15 years and over.

Source: ABS 2001 Census of Population and Housing.

...CDEP
Persons who participate in CDEP are classified by the ABS as 'employed' since they voluntarily forgo unemployment benefits in order to access employment and training opportunities and are entitled to award wages and workers' compensation. There were 17,800 Indigenous persons who were reported on special Indigenous forms (SIFs) as CDEP participants in the 2001 census, equal to about 60% of the total number of persons on CDEP according to administrative records held by Aboriginal and Torres Strait Islander Services (32,000 persons). People on CDEP who live outside remote areas were unlikely to be identified as CDEP participants in the census since CDEP participation is not captured on general census forms (for more information, see Australian Social Trends 2004, Aboriginal and Torres Strait Islander peoples in the labour force, pp. 118-123).

The median individual income of CDEP participants ($185 per week) is much closer to that of Indigenous persons who are unemployed ($167 per week) than to the balance of Indigenous persons in mainstream employment ($501 per week). When Indigenous persons in mainstream employment and CDEP participants are combined, the median individual income of all Indigenous persons classified as employed ($431 per week) was equal to 73% of the median individual income of employed non-Indigenous persons (compared with 84% when only mainstream employment is considered). When CDEP is included, the gap between Indigenous and non-Indigenous individual incomes increases in every major occupation group, with the greatest difference for Labourers and related workers.

2002 NATIONAL ABORIGINAL AND TORRES STRAIT ISLANDER SOCIAL SURVEY

The first results from the 2002 National Aboriginal and Torres Strait Islander Social Survey will be released at the end of June 2004. The survey collected information from about 9,500 Indigenous people aged 15 years and over, in both remote and non-remote areas of Australia.

The survey provides detailed information on the income characteristics of Indigenous persons, including those who participate in CDEP. As it collected data across a wide range of areas of social concern, income characteristics can be analysed in relation to other topics such as family and community, culture and language, health, education, employment, housing, crime and justice and transport use.